It’s natural to think that this is a wonderful time to own a campground. After all, there’s been an explosion of interest in the outdoors. Privately owned parks throughout the country are packed to the limit with fresh-faced campers, all trying to find the freshwater bib on their new RV.
To be sure, campground owners are most certainly raking in an incredible amount of registration fees as they hang a “no vacancy” sign on their gates almost every day of the week. But owning your own little piece of outside heaven isn’t as easy – or as lucrative – as it may look these days.
Over the next few weeks, we’ll look at a few of the factors that are making it more difficult to own and operate a campground and, as a result, are driving up the fees paid by campers.
Insurance is a “must-have” – if you can find it
You can’t run a campground business without good insurance. When a park is crammed with hundreds or even thousands of daily visitors there are going to be problems. People slip and fall, and amenities such as swimming pools and Jumping Pillows raise risk ratios. Yet it’s the ever-present risk of wildfires that is really sending campground insurance costs into the stratosphere.
Two Oregon campgrounds recently destroyed by wildfires resulted in insurance claims of $1.8 million and $800,000, respectively. One insurance industry executive told me that those amounts together were more than all the annual campground insurance premiums collected in the entire state of Oregon. From the perspective of the insurance companies, those sorts of payouts are a recipe for going out of business.
In fact, that’s exactly what’s happening. A few insurance companies have folded in recent months, and a few more are deciding that insuring campgrounds in high-risk wildfire areas ironically isn’t worth the risk. Some are pulling out of campground insurance markets entirely in some Western states.
Wildfire claims have become common
Out West, wildfires have become a way of life. Each year, massive fires race through the forests and across grasslands, consuming everything in their path. Sometimes, a campground gets burned down to white ash. Fire claims have become so common in the West that insurance companies have been forced to either raise rates to astronomical heights, pull coverage from some campgrounds, or just leave certain markets uninsured.
In California, it’s gotten so bad that the state was forced to create a statewide “Fair Plan” that required insurance companies doing business in that state to provide policies to businesses like campgrounds in high-risk regions that could not find coverage anywhere else. In most cases, the high-risk policies are very expensive and offer minimal coverage. For example, one campground owner had his rate go from $17,000 per year to $76,000 annually for less coverage than before. Ouch!
Campgrounds are prone to end up in the insurance industry’s higher brush fire protection classes because they are often far away from fire departments, likely aren’t on city water supplies, and are covered with dried-out trees and landscaping. The national Brush Fire Zone index ranks zones around the country between 1 and 100, with zones ranking 100 posing the highest risk.
“If a campground is in a zone over 50, companies don’t want to insure them at all,” said Damian Petty of Leavitt Recreation & Hospitality, a primary broker for campground insurance. Leavitt’s job is to shop for the best insurance coverage for their campground-owner clients, but Petty said good deals are becoming rare.
Most campgrounds in California are in high-risk fire zone
Most campgrounds in California now find themselves in the high-risk brush fire zones. “In the case of companies that stayed in California, most gave big rate increases to campground owners that could find insurance,” said Petty.
Rate increases of 20 to 40 percent are common. Insurance costs have even risen as high as nearly 70 percent in a single year. Petty said some insurance carriers are passing on insuring some very nice parks if their loss ratios in certain areas aren’t looking good. Montana, for instance, hasn’t been performing very well in that regard mostly due to wildfires, and many carriers refuse to even offer a quote or come in with an exorbitant rate.
That, of course, can only lead to pressure on campground owners to raise rates to protect their bottom lines. Remember that they also have to worry about increasing costs of labor, materials (like lumber and paper goods), fuel, and water, to name just a few. It all adds up, sometimes driven by all of those extra camper nights.
Insurers want “vanilla” campgrounds
Insurance companies have come up with their own ideas for campgrounds, and some of them will make you shake your head in wonder. They’ve wrapped their arms around the National Fire Protection Association’s “Firewise USA” Program, which promotes the clearing of brush around structures and the installation of fire suppression systems.
That sounds nice until you realize that many insurers are “suggesting” park owners remove ALL trees within 200 feet of any buildings. That would lead to a lot of completely tree-less campgrounds.
Petty said insurance companies also prefer the more “vanilla” campgrounds that don’t invest in “risky” amenities such as zip lines, rope courses or expensive clubhouses. Historically, insurers also haven’t been wild about parks with older playgrounds, Jumping Pillows, or even swimming pools. Not having high-risk amenities is one of the few things under a campground owner’s control.
Petty said campgrounds can also mitigate their risks by installing big irrigation-system sprinklers (if they are lucky enough to have a dependable water source), hiring professional arborists to trim back dangerous tree limbs, and getting rid of fire fuel sources where they can. But what can you really do when your park sits in a beautiful national forest setting that is in reality the true lure of your campground?
All these measures cost a lot of bucks, and those costs are often passed along to you, the camping consumer.
Where all of this is heading
Insurance cost pressures on smaller “mom-and-pop” campgrounds can be extreme and may force more than a few smaller operators out of the business. It can also be an incentive for them to sell to larger, corporate buyers who can better absorb the rising cost of insurance.
Insurance could also be a factor that eventually slows the construction of new parks or the expansion of current facilities. It will most certainly affect an owner’s plans to add amenities – even expensive cabin accommodations – that might get a thumbs down from their insurance carrier.
Petty said the insurance picture for many campgrounds is likely to get worse before it gets better. That means RVers can expect insurance costs to be yet another factor driving up some site rates. Higher insurance rates aren’t universal to all parks, but it’s surely a factor in play for many owners.
So, the next time you think campground owners must be laughing all the way to the bank, keep in mind that there are a lot of fingers in their wallets taking an increasingly larger bite.
COMING NEXT WEEK: Dealing with the campground labor crunch